Corporate Transparency Reporting Act Remains Shape Shifter

The U.S. District Court for the Eastern District of Texas in Smith v. U.S. Department of the Treasury was the last thing standing between reporting companies and their Corporate Transparency Act reporting obligations after the U.S. Supreme Court refused to overturn the stay of the injunction in another Texas federal case. However, in mid-February, the Smith court lifted its preliminary injunction. In response, FinCEN imposed a March 21 filing deadline but advised that might also change. Yesterday, it did.

On the evening of February 27, FinCEN announced that, for now, it will not issue any fines or penalties against companies based on any failure to file or update beneficial ownership information (BOI) reports regarding the CTA by the current deadlines. FinCEN states this is due to the Treasury Department’s commitment to reduce regulatory burden on businesses, as well as prioritizing BOI reporting for entities that pose the most significant law enforcement and national security risks.

No later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines because new guidelines and clarity are still needed. FinCEN is also seeking public comment on potential revisions to existing BOI reporting requirements.

If you represent or are a member of an entity subject to CTA reporting requirements, these are welcome and sensible developments. However, please continue to pay close attention to this ever-fluid situation. We will do the same and will continue to update our insureds.